What's going on?

Hurricane Harvey�s impact on markets is still being felt � but there�s another storm on the way and it�s already affecting markets�

What does this mean?

Hurricane Irma, one of the largest storms ever recorded over the Atlantic Ocean, made landfall in the Caribbean on Wednesday and is expected to arrive in south Florida this weekend. With hurricanes come damage, which is typically covered by insurance. However, often the company that sells the insurance buys insurance for itself from so-called reinsurers � meaning large reinsurers like Everest Re and XL Group are on the hook if the damage is severe (both stocks are down significantly this week). Stock prices of airlines and cruise liners have also been hit, as both industries lose business over the affected time period.

Why should I care?

The bigger picture: The impact of natural disasters on the economy is usually short-lived.


Texas and Louisiana have experienced a huge disruption to their economy due to Hurricane Harvey and, depending on the damage wrought, the impact of Irma on Florida could also be severe. Typically, although not always, the impact of natural disasters such as these is short-lived. For example, the pause in oil production that�s occurring now should be more than offset by rebuilding efforts. While there is undoubtedly a huge human toll, the disasters may not hurt economic growth enough, over the medium term, to impact investors.

For markets: The oil markets have been whipsawed by the two recent hurricanes.


First, the oil price fell as Hurricane Harvey forced the closure of many oil refineries (they stopped buying oil to refine). But now, just as those refineries are starting back up, a huge hurricane is heading for the Gulf of Mexico, where a lot of oil is drilled � and the potential hit to production is already pushing up the oil price (i.e. less supply would increase the price).